For the US sportswear manufacturer Nike, the current stock market year has been disappointing. Since the beginning of the year, Nike's stock has lost almost eleven percent of its value (as of June 24, 2024). The main causes are the weakening Chinese economy and high inflation in other regions, which burden sales. Additionally, competitors have been able to use Nike's long innovation cycle to their advantage. These developments led Nike to prepare its shareholders for a bleak sales outlook when presenting the figures for the third fiscal quarter (end of February).
On June 27, Nike will present the results for the latest quarter. While no spectacular results are expected, the outlook for the 2025 fiscal year is likely to be crucial. A positive tone could drive the stock price.
According to "Barron's," several analysts are optimistic about the future. Maria Lernerman, portfolio manager at Harding Loevner, said: "I don't see it as a question of if, but when performance will improve.
A potential catalyst for Nike stock could be the Summer Olympics, which start on July 26. They offer Nike the opportunity to shine with its high-profile star athletes. Additionally, the company is the outfitter for the American breakdancing team, whose Olympic debut promises significant media attention.
Simultaneously with the Olympic Games, Nike is launching a range of new products, including various sneakers. Some of the upcoming products, including new versions of the Nike Air franchise, were already presented at the company's Innovation Summit in Paris this spring.
Analysts are confident that these innovations could appeal to customers' tastes. Edward Jones analyst Brian Yarbrough wrote: "We have seen Nike in this situation twice in the last ten years, and when they truly focus on new innovations, it has led to great results in the following years.
Lorraine Hutchinson from Bank of America Securities also commented positively: "We do not expect green shoots to translate into revenue growth in the first half of the 2025 fiscal year, but Nike's expansion of its innovation pipeline would increase confidence in a turnaround in the second half of the year." In light of this, she reaffirmed her buy recommendation for Nike stock.
Stifel analyst Jim Duffy points to the potential for brand recovery and the market-leading position of the US company. In his opinion, the Nike stock should be traded at $117, which would represent a significant premium compared to the current price level of $97.23 (as of June 24, 2024).
Overall, it remains to be seen whether Nike can achieve a turnaround with its new strategies and products and regain investor confidence.
